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Consumer Demand for Connected Home Products Slows and Continues Rapid Drop Off

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If you went to CES and Mobile World Forum, or read about them, you know that the connected home sub-sector of the broader Internet of Things (IoT) market is one that a host of companies are eyeing as a major “next big thing.”  Of course “smart homes” have been an industry target of opportunity for several decades with little success thus far, beyond home security systems and using Internet connectivity to allow remote users to do things like check the views from their webcams, record TV shows remotely, open garage doors and turn lights on and off.

Reality has been that, like most revolutions, the adoption of connected home capabilities has been evolutionary.  It should be noted that this should not necessarily be viewed as a bad thing.  However, to say the least, the lack of a big acceleration of adoption has been a challenge for vendors and ecosystems that have their eyes on the connected home as a big area of growth.

Unfortunately, Los Gatos, CA-based, big data-driven “Market Coach” firm Argus Insights, in its latest Argus Insights Connected Home Report, found that after an encouraging 2014 the connected home/home automation market for the first half of 2015 is slowing down rather than picking up. Data show that as of May 2015 consumer demand for connected home devices such as thermostats, light bulbs, locks, sensors and cameras experienced its first drop below the level of a year ago.

John Feland, CEO and founder, Argus Insights said that: “Based on our review of consumer interest, the state of home automation in 2015 is not looking good for anyone who sells or makes these devices…It is obvious that the early adopters have bought what they want and other consumers are expressing frustration that these products are complicated and difficult to set up and use.”

Source: Argus Insights, Home Automation Demand Report, June 2015

It was also noted that a monitoring of IoT conversations shows that wearables dominate the mindshare, mentioned 10 times more than Connected Home. 

“Consumers are not seeing the value yet from these home automation devices,” said Feland. “There is a lot of confusion about standards with Google introducing Brillo and Apple’s new HomeKit. Add in WiFi, Bluetooth, Zigbee and Z-Wave and there is a lot for any consumer to grapple with during installation. Until things become easier and consumers don’t have to cobble together a total solution, I believe we will continue to see this stagnation continuing for the rest or 2015 unless a new offering addresses these issues and revitalizes the market.”

The key takeaways from the report cited by Argus Insights along with the observation that its crunching of the numbers found the home automation market is stalling and may be contracting include:

  • Consumers are unsure what products they want or need while first adopters have already made their purchases.
  • The Google investments in Nest and Dropcam and Samsung acquisitions in home automation are not growing at the rate expected from such acquisitions.
  • Overall Connected Home device market is shrinking as product segments lack innovation.

For those who have followed the smart home initiatives over the years, this probably all sounds familiar.  That said, and I may be overly optimistic, there are places to look for a silver lining and as harbingers of better things ahead in the not too distant future. These include all of the activities surrounding such things as smart grids, multi-screen usage and new apps, telemedicine advances relating to keeping aging populations in their homes with a connected life style that accommodates the needs of remote care givers an family members, increased speeds for residential Internet including new residential gateways, emerging business models for IoT and M2M deployments.

In short, despite the wireless Tower of Babel and marketing issues surrounding value propositions, unlike the past the connected home really is on its way this time.  And, like good wine it is going to take time for the mass market value propositions to sort themselves out.  This is not so much a technology challenge as it is a marketing one. Indeed, the dip in adoption should be a call to action to the vendors that they need to rethink things.




Edited by Ken Briodagh
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